Although a permanent workforce provides the necessary stability to enable a business to perform consistently, dismissing the merits of hiring contractors and interim professionals will hinder company efficiency. This is particularly true in the current global climate, where markets are unstable and demands are ever changing. Here, we outline some of the benefits to hiring contractors and interims that firms must take into account in order to make wise hiring decisions over the coming months.
Given the current market inconsistency and changing business guidelines, employers are likely to face vast fluctuations in their workload. Rather than hiring a permanent employee during a busy period only to find that they have nothing to do weeks later, employing a contractor or interim is an efficient way to manage workload imbalances.
Typically, the hiring process for contractors and interims is quicker, permitting companies to increase their workforce at short notice as demand increases. Similarly, ease of separation for businesses is far greater with contractors and interims. Employers are not required to make any long term commitment and are able to end the contract after as long a period as they desire, so long as contractual termination rights are adhered to. Consequently, there is no need to keep on contractors or interim professionals hired during busy periods if business lulls.
We have placed contractors for as short as 1 month and as long as 12+ months; the length of the contract is entirely flexible in line with the client’s needs and the skills that the contractor can provide.
Hiring for project-orientated work:
Another benefit of engaging with contractors and interims is the flexibility of hiring for variable or fixed length projects. The unforeseen nature of the Coronavirus pandemic meant that businesses were unprepared and so many will have to construct and implement recovery plans to help them recover from the lasting effects of COVID-19. Others will face unprecedented challenges that their team does not possess the niche knowledge and skills to adequately solve.
In such circumstances, firms could hire interim managers and contractors to inject the precise expertise into their business that would allow them to carry out projects aimed at minimising the effects of the Coronavirus pandemic on their business.
It should be noted, too, that interims and contractors are experienced in completing projects with a very short turnaround time. They are dedicated to that project and that project only, and so can put all of their time, energy and skills into completing it quickly and to the highest standard possible. By hiring an interim or contractor, then, companies are able to complete projects quickly and effectively, rather than just adding to the workload of already busy employees who will neither have the skills nor the time to prioritise them.
This is particularly beneficial in the current climate, given that many firms have had to put projects on hold due to a lack of financial resources or a lower headcount. In these cases, contractors and interim professionals can get to work to ensure that COVID-19 has minimal effect in delaying projects, keeping companies as close as possible to their planned working timelines.
Due to both current market inconsistencies and the unpredictability of the business landscape for the foreseeable future, many companies are relatively uncertain in their economic position and have little to no line of sight as to how their financial situation may be set to change. The possibility of short term agreements with contractors is attractive in enabling firms to employ without security in the future of their finances. However, hiring contractors rather than permanent employees is also beneficial for businesses facing economic insecurity by saving them costs.
Although contractors and interims are typically paid a higher hourly rate than permanent employees thus making them appear costlier, the overheads involved in hiring them are far lower. For contractors, employers do not need to administer PAYE or National Insurance costs and neither are they obliged to provide them with the same additional employee benefits as their permanent team as these are incorporated into the Daily/Hourly rate. Additionally, the on boarding process is far easier so overall, the employment of a contractor or interim can be much more cost effective than that of a permanent worker. At a time when many firms are attempting to reduce expenses in light of economic uncertainty, this is an invaluable benefit.
All of the above said, it should be noted that some of the ease of employing contractors over permanent employees will change in April 2021. Currently, when contractors are working for private sector companies, the employer is not obliged to add them to their payroll and deduct income tax from their salary unless they are employees of the organisation. It is the responsibility of the contractor to determine their employment status.
However, from the 6th April 2021, an amendment to the IR35 legislation will come into action in order to ensure that contractors are paying no less tax than employees where their work can be classified as an employment relationship. Instead of the contracting agency determining the employment status of the contractor and thus the obligations of the employer, this will become any medium or large private sector firm’s own responsibility.
Whilst the employment status of all temporary and interim workers will have to be determined, many contractors and interim professionals operating on a consultancy basis for a specific project will still not be deemed employees and so will fall outside of IR35 whilst still adding great value to the organisation.
Although this amendment will create additional admin and payment responsibilities for employers, it should by no means put companies off hiring interims. This amendment will likely create greater transparency within businesses and eliminate any hostility towards contractors from permanent employees. Moreover, all of the aforementioned benefits to hiring a contractor will still apply and the increased employment costs will only affect those deemed inside IR35.
Overall, then, hiring contractors and interims is a simple and effective method of adapting your workforce to changing market demands and the varying skills required as a result.
If you are interested in hiring a contractor or interim professional, or would simply like to learn more about the process, please do not hesitate to contact us at email@example.com.